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I think we can get started. Callum Tishmarsh here from the Life Sciences team at Morgan Stanley. Welcome to Day 2 of the Morgan Stanley Healthcare Conference. Really pleased today to be joined by the team at Garden Health. We have Amirali Talisaz, co-CEO, and Mike Belciefo. Thank you both for being here. Thanks for having us. Before we get started, just for disclosure relating to this discussion, please see morganstanley.com forward slash research disclosures. So a lot to discuss. we've had quite a bit of recent news since those Q2 results but maybe we can just rehash that Q2 very strong performance across the board would love a little State of the Union on garden health to kick off and then we can go into some specifics from there yeah sure so great to see you guys Q2 was another fantastic quarter for garden health the flywheel of gardens is moving accelerating and And a bunch of stuff that we work on for a few years, they are all coming to result in contribution for gardens right now. So overall, we reported greater than 40% revenue growth year over year. On the oncology side, volume growth of over 60%. On shield front, the growth of more than 250%. and we reached to a point that you know we are not building CRC screening market with SHIELD anymore that category is already out there we're at the phase of category scaling and developing that market as fast as possible on oncology side the smart liquid biopsy and smart platform in general both on liquid and tissue front is resonating very well it's helping to develop the market and help us with a bunch of market share gain through a bunch of applications that it's enabling for the oncologist to provide some additional actionable clinical information. So we are very excited of what we report. And Mike, any standouts from you for the quarter? I think we just talked about all of the great news on the volume growth, on the revenue growth year over year. So, no, it was just another very, very strong quarter from Gardent, and, yeah, we're really pleased with Q2. Amazing. So, let's maybe dive a little deeper into the oncology business first. You have an increasingly well-established product both in liquid and in tissue. How do you see the G360 liquid and tissue working together rather than competing modalities just to make Gardent the kind of top choice for oncology practices? so they are really at large scale complementary to each other if you look at actually guidelines now for a bunch of cancer types dual testing with both liquid and tissue is indicated and recommended in those guidelines and what actually the recent FDA approval of garden 360 liquid CDX provide us is really simplification of that ordering workflow and making sure that both tissue garden 360 and our liquid 360 are orderable and accessible for physicians and they're reimbursable for us. The data that's coming out is also supporting this kind of dual use cases. So it's more than really a computing kind of position. it's complementing on the data front also having both of these two assets really helping us to really enrich the data platform that we have at gardens you know when we are looking at you're literally the only company on the cgp front is providing epigenomic information and capturing that data at scale there's a lot of apps that we Have developed so far and many apps that we have in pipeline enabled with the power of the data that we're capturing. I think it's just helpful, given the growth rate you're putting up, to just level set on penetration today across your liquid and tissue categories, not just in the core indications, but also maybe more broadly into some of the new indications you've been looking into as well. Yeah, and it's a function of different cancer types, but in general, tissue is well penetrated. about 70-80% of the market has developed, so really what Tissue360 with the innovative platform that it has enabling us to do is really the market share gain relative to the competition by providing additional insight to the clinicians. Liquid biopsy is still pretty under-penetrated. When we are thinking about maybe overall and again cancer where cancer is different maybe we have like about 40% plus-minus kind of market penetration at this time. For a single time point use case for liquid, there's still a lot of room to grow on single time point and then on the other dimension of really going toward longitudinal monitoring and providing multiple testing per patient. Right now, still, we are doing 1.2, 1.3 tests per patient in terms of liquid and tissue testing, and that number can grow in a meaningful way. We are also very excited with the recent FDA approval, which really was landmark for liquid biopsy field, and especially for Guardian 360 platform to enable longitudinal monitoring of the patients. It's a totally new use case for liquid Biopsy testing. And we get pretty positive feedback just on that genomic plus epigenomic info that you create with the CDX platform. What do you think physicians can do today with that product that they perhaps couldn't do a few years back? Maybe just give some use cases from your experiences. Yeah, so on the genomic side, it's kind of pretty straightforward. You know, now it has over 700 genes. The CDX versus the prior one was about 10 times smaller. On epigenomic, it is really where the main differentiation is. I'll give you maybe an example of an application. So a lung cancer patient who's been diagnosed with non-small cell lung cancer, it's some kind of specific pathway for treatment and management of that disease. We know that some of these patients go from non- small cell cancer type to small cell lung cancer type. And at large scale, this information is hidden to the physician. Because in order to get to that information, you need to do rebiopsy of the tissue of the lung, which is not really very typically done. And the treatment paradigm of small cell lung cancer is totally different. Now, with this GARDEN360 liquid, through epigenomic data that we have and the application that we enabled, the doctor can look at this transition very easily. Another kind of story that, in fact, in this trip I just heard is some of the patients who have cop cancers through epogenomics, we can figure out where is the site of the tumor. And sometimes, actually, for this specific patient that I heard, it was not a cop cancer patient, but really the oncologists were concerned if the diagnosis was accurate or not. And GARDEN360 liquid, in fact, showed that what was considered a breast cancer patient was, in effect, had a totally different cancer type. And the treatment of that patient got changed in a very meaningful way. And Mike, just on the ASP going up to the ADLT price, I think just under $8,500, maybe just talk to us around your confidence in that pricing outcome and just the math we should be doing on that conversion over from the current price over to the ODLT. Yeah, we're very confident with the ODT process. You know, we've gone through this twice before now, First of all, with the old Garden 360 CDX back in 2021 and, you know, two years ago with Shield, both of those have gone through the ADLT status after receiving FDA approval and Medicare coverage. And so it's a relatively straightforward process. If you're FDA approved and Medicare covered, then you qualify for ADLTs status. So this is the same now for Garden 360 Liquid CDX. We're in the process, in the ADLT process. So, you know, we expect that to come in the first half of next year. So very confident on that. And obviously, once we get that, you mentioned the ADRT price will be $84.55, so an increase from $5,000. Then over time, we would expect an increase in the overall ASP for Garden 360. It's around $3,000 now compared to a Medicare rate of $5,000. So something like a 60% realization of the Medicare price overall when you include all the Medicare Advantage and the commercial payers and the Medicaid and some of the zeros. So I think it's reasonable to assume that over time, and we think this will take sort of 18 to 24 months for all of the payers to sort of change their prices. But it's unreasonable to assume we'll sort of realize something like 60% of $84.55, which is around $5,000. So I Think we look at that in 2028 as being sort of our target ASP for Ghana 360. Great. And one of the newer updates since Q2 results, Serena 6, Camus Estrin as well, approval there, and then Serena 4 not working out as the trial had planned. So talk to us about what that means for garden specifically and the use cases there, because I think it could unlock this new meaningful opportunity for the test. It's very exciting. It's the first FDA approval and an indication of longitudinal testing using GARDEN360, in general, liquid biopsy. It's a new clinical paradigm, and that's why even I think contributing to the fact that the FDA went through a HATCOM process for this drug. And now it's proven, actually, after three failures, not just by AstraZeneca, but by other oral certs, that using that drug as a front line, a first line, is not going to work. So you really need this biomarker stratification ratification monitoring this emergence of ESR1 mutation to use this drug on the right subset of patient population. So this really emphasized the value of liquid biopsy and GARDEN360 is the only FDA approved CDX. Now in terms of the size of the opportunity, we estimate about 37,000 breast cancer patients to fall under the indication use of this drug. In the trial, those patients needed to get tested every three months, so it's about maybe 150,000 annual testing opportunity, but obviously we have work in front of us. We need to see how the drug launch goes by our partners in AstraZeneca in terms of the adoption, and, you know, in order to fully realize that opportunity, we have some work to do on the reimbursement front on changing the 90.2 NCD, which right now doesn't allow Medicare payment for longitudinal testing, but that conversation has been ongoing, and we are working on it with CMS. Any rough timelines you would put on that? Probably maybe we are one year away from that. Okay. Helpful. And then Reveal as well, I think, was a standout for the second quarter, some really strong sequential volumes there. Could you maybe just unpack where that success is coming from, whether they are existing MRD users that have switched over to Reveal or whether these are new MRD uses coming to the table. Maybe just a little bit of color on that success would be really helpful. So, you know, the Revealed MRD was getting used by a fraction of the oncology base that we have in terms of ordering physicians. What this Reveald treatment monitoring is enabling, it went actually much better than what we expected. We just finished the second full quarter of the launch with that product now. And effectively, all Garden360 user base, which is vast, vast majority of the oncologists, when they are considering CGP for profiling, now they have an option to bundle a treatment monitoring post-360 if they are interested. it it has a very nice synergy same call point similar kind of same kind of channel that we have and we have some work to do on the reimbursement front you know we have some kind of applications in front of moldy export like two major indications of chemo and io but the adoption has been very great which is really an endorsement of the brand value that Guardian 360 has in front of oncologists and to some extent in the Reveal franchise. And then, I guess, with Revealed Ultra coming by the end of the year, I believe. Yes. Just how are you thinking about that tumor-informed versus tumor-naive trade-off in MRD? And I guess what is your expectation longer term of the relative adoption of both products? So we wanted to make sure our bag is complete. You know, there are some doctors that really, they prefer tumor-informed MRD versus tumor-naive MRD. So we were leading the tumor- naive side, but, you know, that was a gap that we had in our pipeline and our back-up commercial team. And now they're going to have it by the end of the year. Unlike, you Know, many players in the field of TIMRD, that it's kind of their platform or their offering is kind of, At least on the technology side, it looks kind of me too. Reveal Ultra is pretty differentiated. We are very excited to talk about it when we release the product. We are on track to launch it before the end of the year. I think it's going to be a fantastic contributor to the whole field of MRD and guard and oncology brands that we have. In terms of use cases, it's not a replacement of Reveale. It's really, you know, for some doctors, for some patients, they prefer tumor-informed when the tumor is an option. And for some patients the convenience or the faster turnaround time or lack of tissue really provides a better fit for just liquid-only reveal to be used. So I think it's just going to give optionalities to the oncologist. You said it's just some internal validation work that's holding back the ultra-launch. That's the only remaining step, right? we are almost done stay tuned it's going to come out before end of the year amazing and just given your scale I think increasing in MRD having that very established CGP franchise how does that kind of full suite solution resonate with the physician versus you know incumbents that perhaps are under index to you know one of those product types yeah I think like Guardian is not like a holding company of you know few business units frankly all these assets that we have are really working together and give us leverage and new commercial opportunities i think on reveal and 360 are very clear like we talked about 360 connecting it with reveal for treatment monitoring and then when the treatment is not working again the profiling is going to be indicated so another garden 360 even in the MRD and early stage, monitoring those patients with Reveal, and at the time that Reveals is finding something, then typically those patients need to go through profiling, and reflex to Guardian 360 would be indicated in those patients. There are some subsets of the market that they really value, single-stop shop or the convenience of the ordering. now these kind of portfolios that we have give a lot of ease and connectivity of offering and the data for busy oncologists in the marketplace, even on the SHIELD front. What we are seeing is even connecting SHIELDS to our oncology brands on both sides are giving some commercial benefit. So just imagine down the road when a good fraction of CRC patients are going to get initially diagnosed through screening done through SHIELD. Right now, when we are talking with some accounts, they are interested to know that we have some screening solutions in terms of a complete portfolio. Nobody else, Garden is the only company who has offerings across screening, MRD, and CGP testing right now. On the other side, on Shield front, we are getting the benefit from established brand of liquid biopsy pioneers and trusted vendor when we are talking to primary care physician. That's been helping to see this market adoption that we are experiencing. That's a good segue probably on to Shield. I would say another couple of very good updates there on the commercial side since those second quarter results. We had Carelon and then Evicor yesterday. So just unpack a little what that means for the SHIELD commercial program and maybe some numbers as well on just the covered lives now and how rapidly you can go after that opportunity. Yeah, I think the flywheel of SHIELDS is moving very fast. Literally, it was about a year ago that I think the conversation was, would the patient and physician use a blood-based colorectal cancer screening? Does this category even exist? do on-screen patients get tested with a blood test. Now, just in a short time of about a year, we are in a category scaling phase. About 80% of all eligible patients have coverage for SHIELD. 94 million people with multiple successes that we had and wins that we during the last few months, few weeks, now 80% of people have coverage for Shield. It's dramatically changed. It just gives us opportunity to provide more equitable access to this test and continue to drive commercialization and scale up of this brand. And is there anything holding back the momentum that you can go for? Just giving you the commercial coverage is there now. Well, it will be coming and evolving. but is there anything just holding back the rate of uptake that you could perhaps push out into the market or do you feel like you have the capabilities supply chain infrastructure to service that demand we are moving as fast as uh guardant is a fast-moving company and for shield we're doing as fast we can in terms of scale up like dramatically the size of sales team has increased like you know we mentioned that we started this year with more than 300 people in the field in terms of commercial field force and Q2 earning we said at that time we had more than 400 people in the field our DTC campaigns went from nothing last year to some pilot phase earlier this year and now really at a very scale DTC campaign right now in terms of lab you know we bring forward some of the capacity that we were planning to build down the road we moved it forward so we are very excited with those kind of progress that we are seeing on the workflow we got FDA approval for a more scalable workflow for shield very recently so that would really help with this scale up and also reducing the cogs of shield in a meaningful way even before end of the year. So in general, we are moving as fast as possible. It might maybe hit on that COGS reduction for Shield. I think it was a pretty interesting evolution that we've seen. Yeah, we know we had a very nice reduction in cost per test recently. I think we've been mentioning for a long time that really we've got three main drivers of cost reduction over the next couple of years to get us from over $1,000 per test when we launched, and we're targeting a $200 test when we're at scale. And so we've made really good progress scaling our lab, getting a lot of efficiencies. Volume, of course, has been a driver to date of bringing the cost per test down. And in Q2, it was just over $400 per test. But recently, we got an FDA approval for changes to the workflow. So we've taken out a lot of analysis that was unnecessary. That needed to go through an FDA SPMA process just to prove equivalency with the original test. But we were very successful in doing that. So that's now gone live in the lab. And we expect that by the end of the year, we'll realize something like a 15% reduction on that $400 COGS that we had in Q2. So we think we'll exit the year with a cost per test of $350. You know, we've still got work to do. We've been investing heavily in automation. Our plan is to take out as much labor cost as possible in the lab where we're processing SHIELD. So that work's ongoing. That will, again, need to go through an FDA approval process. But when we come out of that and we expect some time, probably late 27, we'll see another significant step down in cost per test and then continuing to drive efficiencies and with additional volume, that's going to get us to $200. So I think we're well on the way with the target that we set and we're really pleased with the results. And with these new commercial wins, could you maybe just unpack what that means for ASPs and what those different rates look like, perhaps, across the different plans? Yeah. Obviously, getting coverage on the commercial side is very positive, and it's going to have an improvement on what we get paid by the commercial base. Just as a reminder, we've got the Medicare ADLT rate, $14.95. That's been in place now for two years, and that's a well-established rate. And over the last two years we've seen very strong payment from Medicare Advantage payers, and so we're getting very good reimbursement on that side. Where we've lacked to date has been on the commercial side, and with no coverage we've effectively been getting zero paid. So we've been managing our ASP. We've primarily been focused on the over 65s where we do get paid. As we've got into guidelines with ACS and now with these commercial coverage decisions, we'll start to open up to more and more under 65s. So that'll have two impacts in the near term. Obviously, for the payers where we're covered, we'll stop to get paid, we'll have to see what that is and we'll see what decisions we want to make about contracting with those payers, but those zeros will start to transform into paid tests. But we'll still have some zeros from all of the other commercial payers. So I think with our ASP, it's going to depend a lot on the mix over the next couple of years. We know that that percentage of commercials and potentially the percentage of zeros in the short term is going increase. So, you know, we had for the last couple of quarters an ASP in the $800 range. We've guided for the remainder of the year sort of $770, so a little bit of a dip. There might be a further dip as we have more and more zeros when we open it wider to commercial payers. But obviously, this flywheel that Amir Ali mentioned on commercial reimbursement, that's going to drive ultimately the ASP backup and so we're very confident that we'll have a strong ASP in the medium to long term. Great. And Amir Ali, just on the ramp any seasonality we should be thinking about for the third quarter? I realize again it's still early on and so that ramp probably still looks pretty aggressive but anything you're seeing out there in the market? So you know just as a commercial organization on PCP front still we don't have a lot of history data to really rely on, but we have some and we are looking at a lot of other kind of external data. In Q3, what we talked about is there are some seasonality in patient food traffic in PCP offices during the summer days. In Q4, typically you see some kind of weather events. So these are in terms of some of the dynamics of Q over Q and we consider it when we set our guidance for second half of the year in our Q2 earning call. So besides that, nothing else to call out. Then maybe one for both of you, but just thinking about the level of investment going in behind Shield now, DTC spend and the reps, how should we be thinking about that? How should we think about the direction of travel for both of those in the years ahead? Yeah, I mean, I think we've consistently said that And as Shield continues to progress and volumes increase and revenue increases, we'll be investing any incremental gross profit back into the sales and marketing line, basically to drive the commercial scale up for screening as quickly as possible. So we've been doing that. Obviously, getting commercial coverage, being able to reduce our COGS is going to just allow us to reinvest more gross profit back into the line. And so, you know, I think over the short term, we should just expect that investment to continue to ramp. And we want to get to a place where we've got, you now, 600, 700 reps and a very strong DTC level of spend as soon as possible. And so yeah, we're scaling this quickly. So you should expect that in the near term to continue. Great. And then just on competition, obviously an evolving market, more people coming into the fray. What do you think are the components of Shield that make it stand out as the preferred go-to screening test here? And how you think about that market evolution over time, what that rough share perhaps could look like five years from now? Yeah, I'm very confident about the position that we are in now. You know, still today, S.H.I.E.L.D. has the best CRC detection readout of any other kind of technology out there. So we are still the best in terms of CRC detections. It's the most clinically validated test. When you're thinking about the experience with way over 200,000 physician testing, real-world adherence, here and a bunch of randomized studies that we've done in different health systems or settings to show the overall rate of screening can go up significantly. Publications that we have behind SHIELD, in general, it's the most clinically validated platform. We also have the network and infrastructure that we built at Guardant during last decade, I think some elements like, looks kind of maybe simple, but in reality it's a major infrastructure build-out that takes time. Like, for instance, blood draw. Phlebotomy networks. Like at Guardant now we are working with tens of thousands of contracted phlebotomists that help across our brands. And that's not easy to build in like a regional setting, you know, at the national scale. So I don't think a bunch of this competition, which is going to come to the market, have anything on that front. And we have first-mover advantage with the commercial team, which is really focused on this blood-based CRC screening. I think some of the competition is going to have a hard time with the positioning of maybe stool tests versus blood-base tests. and lastly over time this mcd opt-in is going to show powerful contribution in the values that we are going to offer to the physician versus crc only ass yeah i mean we can hit on the the mcde opt-on we obviously have an outcome for a competing mcda test uh next week so how are you thinking about that category what's the physician feedback been i think you said the majority have opted in for the mccd feature so maybe just talk through the the evolution you're seeing there Yeah, I think still we are in relatively early innings of this MCD opt-in and offering in the marketplace, and the majority of physicians are using Shield now as a multi-cancer detection test, the way that actually we built this platform. We were not sure if PCPs in general that sometimes you look at as maybe they are not the most sophisticated physicians out there, they would adopt this in such a fast space. And it's the broadest way of offering MCD in terms of accessibility. As long as the patient is indicated for colorectal cancer screening, which is 90% of the patient age 45 and above, if their doctor is interested and the patient is interested, they can opt in to receive multi-cancer detection. That's very different than maybe some of the competitors offering. It's not broadly accessible for everybody. It requires very high out-of-pocket payment in order to get access to this kind of innovation, and we never believe that's the best way to really make sure the innovative test needs to get offered. So we are very excited. I think over time, we are going to continue to see that this was the best way to make AMSAT available in the marketplace. We wish our other players with their ATCOM best of luck. It would be good for a field to move forward if that ATCOM goes well. But that would not give them really a broad reimbursement pathway versus the pathway that we have, which is very unique to us. Anything from the data you're seeing on the MCD side thus far that surprised you or interested you? Still, it's early days. I think the adoption has been pretty good. We are happy with the rate of data that we get access to on the patient side in terms of patient authorization. It's going pretty smoothly and it's continuing to trend in the right direction. In terms of performance and sensitivity, it's too early. We don't have data after we opened up this MCD opt-in. We need to be more patient. And a couple of minutes left, so maybe we can just quickly hit on biopharma. I think growth is shaping up relatively in line with expectations so far this year. But maybe just speak about the pipeline that's evolving with those biopharmacological relationships and any assumptions we should have multi-year horizon on that business. Yeah, no, biopharma continues to be a very strong engine for us, not only with our pharma partnerships, but, of course, it's a leading indicator on the clinical side. And, again, all of the work that we did with AstraZeneca on Serena 6 now comes through and to drive the clinical oncology business. So it's as strong a contributor to garden. You know, I think you've seen over the last 12, 18 months, we've had multiple CDX approvals. We've announced multiple strategic partnerships with big pharma. So we're being more and more integrated into the whole clinical development process with them. And Garden360 has been, you know, a key element of that. And so, yeah, I mean, we look at that to continue. We think those pharma partnerships are incredibly important for the whole of the business. And things are going well. You know, on a long-term basis, we've guided for, in 2028, for our biopharma business to be, you know, roughly $300 million, which infers a sort of, you now, roughly a 10% to 15% annual growth rate, which is roughly in line with the market. so we're very confident about that yeah and hopefully you know some of these strategic partnerships that we've signed can help us accelerate from that amazing well I'm ready Mike thank you so much thank you thank you